Smith & Nephew, Inc. et al v. Arthrex, Inc.
Filing
328
OPINION AND ORDER: Smith & Nephew's motion for summary judgment of infringement 224 is GRANTED in part and DENIED in part. Arthrex's motions for summary judgment as of non-infringement 197 199 are DENIED. Finally, Smith & Nephew's motion for summary judgment as to reasonable royalty damages 267 is GRANTED. Signed on 6/15/16 by Chief Judge Michael W. Mosman. (dls)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
SMITH & NEPHEW, INC. and JOHN O.
HAYHURST, M.D.,
No. 3:08-cv-714-MO
Plaintiffs,
OPINION & ORDER
v.
ARTHREX, INC.,
Defendant.
MOSMAN, J.,
In this case, Smith & Nephew alleges the use of Arthrex’s SutureTak and PushLock
suture anchors infringes on claims 1-68 of its 5,601,557 ("'557") patent. The parties filed
competing motions for summary judgment raising a variety of issues, including infringement and
the reasonable royalty rate for any damages awarded. I held a hearing addressing these motions
on May 23, 2016. At that time, I told the parties that I viewed this case as a continuation of the
2004 case Smith & Nephew, Inc. v. Arthrex, Inc., Civ. No. 04-cv-029-MO that, like this
litigation, involved allegations that Arthrex’s anchors infringed on the ‘557 patent. In light of
1 - OPINION AND ORDER
this determination, I stated that I viewed the colorable differences test as the correct analysis on
summary judgment.
At the end of the hearing, I took the motions under advisement. On May 24, 2016, I
issued a minute order granting Smith & Nephew’s infringement motion with respect to the BioComposite SutureTak anchors infringing and with respect to the PushLock anchors meeting the
“attaching limitation,” but denying its motion as to the PushLock anchors meeting the
“resilience” limitation. I also granted Smith & Nephew’s motion regarding reasonable royalty
damages and denied Arthrex’s motions for non-infringement for the PushLock and BioComposite SutureTak anchors. I write now to explain the reasoning of my prior ruling. As the
parties are familiar with the background of this case, it is not set out here, except as is necessary
in the discussion below.
I.
Summary Judgment Standard
At summary judgment, the moving party bears the initial burden of pointing out the
absence of a genuine issue of fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). This
burden is met by showing an absence of evidence to support the non-movant's case. Id. In order
to defeat summary judgment, the non-moving party must then set forth "specific facts showing
there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (quotations and citation omitted). The court views the record in the light most
favorable to the non-moving party. See id. Where the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Id. at
587 (quotations and citation omitted).
II.
Infringement
The correct infringement analysis hinges on whether this case is properly characterized as
a continuation of the 2004 case and therefore essentially a contempt proceeding or an entirely
2 - OPINION AND ORDER
new case involving new claims and products.1 As I stated in the May 23, 2016, hearing, I agree
with Smith & Nephew that it is accurate to call this case a continuation of the 2004 litigation.
The division of this matter into two different cases was a matter of trial management, and there
are no substantive differences between the products and claims at issue in the two cases.
The products challenged in this case are from the same families of anchors–SutureTak
and PushLock–that were the subject of the 2004 litigation. Although this case alleges
infringement of claims 1-68 of the ‘557 patent and the 2004 case alleged violation of claims 1-7
only, the facts viewed in the light most favorable to Arthrex do not establish that the additional
61 claims create a question of material fact regarding infringement. See Matsushita, 475 U.S. at
587. Claims 8-68 all depend from claims 1-7 and many of the limitations in claims 1-7 and
claims 8-68 are redundant. See Georgia Pacific Corp. v. U.S. Gypsum Co., 195 F.3d 1322, 1331
(Fed. Cir. 1999) (“Unless the patent otherwise provides, a claim term cannot be given a new
meaning in the various claims of the same patent”). To the extent that claims 8-68 contain new
limitations, the additional limitations are based on terms that were frequently used in the 2004
case and were not the subject of any dispute. See U.S. Surgical Corp. v. Ethicon, Inc., 103 F.3d
1554, 1568 (Fed. Cir. 1997) (“Claim construction is a matter of resolution of disputed meanings
and technical scope, to clarify and when necessary to explain what the patentee covered by the
claims, for use in the determination of infringement. It is not an obligatory exercise in
redundancy”); see also O2 Micro Int’l Ltd. v. Beyond Innovation Tech. Co., 521 F.3d 1351, 1362
(Fed. Cir. 2008) (recognizing “that district courts are not (and should not be) required to construe
every limitation present in a patent’s asserted claims”).
///
1
I note, however, that even if I did not view this case as a continuation of the 2004
litigation, there is no absolute bar against comparing an accused product to a commercial
embodiment of the claimed invention. See Adams Respiratory Therapeutics, Inc. v. Perrigo
Co., 616 F.3d 1283, 1288 (Fed. Cir. 2010) (noting that “[o]ur case law does not contain a
blanket prohibition against comparing the accused product to a commercial embodiment”
where the comparison is sufficient to establish infringement”).
3 - OPINION AND ORDER
A party seeking to enforce an injunction through a contempt proceeding must prove: (1)
that the newly accused product is not more than colorably different from the product found to
infringe; and (2) that the newly accused product actually infringes. See TiVo v. EchoStar Corp.,
646 F.3d 869, 882 (Fed. Cir. 2011). The colorably different test focuses on “the differences
between the features relied upon to establish infringement and the modified features of the newly
accused products.” Id. Specifically, it focuses on whether the modifications to the elements of
the product that were previously found to infringe are significant. See id. If the modification to
the elements previously adjudged to infringe is significant, the new product is more than
colorably different. See id. Conversely, a lack of significant modifications means the new
product is not more than colorably different. See id. If the court finds that the product is not
more than colorably different, the next step is to determine whether the newly accused product
infringes on the asserted patent claims. See id. at 883. In this second step, the court is bound by
any claim construction performed in the prior case. See id.
A.
Plaintiffs’ Corrected Renewed Motion for Summary Judgment of
Infringement
Smith & Nephew argues that it is entitled to summary judgement of direct infringement
of the ‘557 patent by Arthrex’s Bio-Composite SutureTak suture anchors and PushLock suture
anchors with large eyelets and gaps in sizes 2.4, 2.5, 2.9, 3.5, 4.5, and 5.5mm. As stated in my
May 24, 2016, order, I grant Smith & Nephew’s motion with respect to the Bio-Composite
SutureTak anchors. I also grant the motion as to the PushLock anchors with large eyelets and
gaps in all sizes meeting the “attaching” limitations, but deny the motion as to the PushLock
anchors meeting the “resiliance” limitation. Smith & Nephew has met its burden of establishing
that no reasonable factfinder would find more than a colorable difference between the modified
element of the Bio-Composite SutureTak anchors and the elements previously adjudged to
infringe or between the newly challenged PushLock anchors with large eyelets and a gap and the
PushLock anchors at issue in the 2004 case with respect to the “attachment” limitation. Smith &
4 - OPINION AND ORDER
Nephew has also established that the Bio-Composite SutureTak anchors continue to infringe on
the ‘557 patent. Smith & Nephew cannot, however, show that there is an absence of evidence to
support Arthrex’s claim that the resilience of the newly accused PushLock anchors implanted
with a 14% larger drill bit is significantly different than the resilience of the PushLock products
found to infringe in the 2004 litigation. See Celotex, 477 U.S. at 325.
1. Bio-Composite SutureTak
Smith & Nephew asserts that it is entitled to summary judgment of infringement because
there is no colorable difference in the resilience of the newly accused Bio-Composite SutureTak
products and the Bio-SutureTak anchors found to infringe in the 2004 case. Like the SutureTak
anchors previously adjudged to infringe, the Bio-Composite SutureTak has a ribbed plastic body
with a molded-in suture-loop eyelet. Arthrex modified the Bio-Composite SutureTak by adding
a 15% blend of Beta tricalcium phosphate (ßTCP), a ceramic material, to the plastic body of the
anchor. Arthrex argues that the addition of the ceramic material to the anchor body is a
substantial change affecting the mechanical behavior of the anchor; the anchor no longer lodges
by resilience in bone. As stated in the May 24, 2016, minute order [325], I find that there is no
genuine issue of material fact regarding whether Arthrex’s Bio-Composite SutureTak anchors
infringe on the ‘557 patent.
a. Resiliency
Smith & Nephew relies on testing conducted in 2008 by Arthrex’s supplier, Kensey
Nash, to establish no issue of triable fact exists regarding whether Arthrex’s addition of a
ceramic material to the Bio-Composite SutureTak anchor significantly modified the anchor’s
resilience. Kensey Nash’s testing found that the new SutureTak anchors have a modulus of
elasticity that is virtually identical to the SutureTak anchors found to infringe in the 2004
litigation. Pitchford Decl. in Support Pls.’ Renewed Mot. Summ. J., Ex. 9; Corrected Decl.
Hayes (“Hayes Decl.”) in Supp. Pls.’ Renewed Mo. Summ. J., ¶¶ 17-19.
Arthex contends the 2008 test results are not relevant here. First, Arthrex points out the
5 - OPINION AND ORDER
2008 report indicates Kensey Nash tested a material designated as LR704, not the LR706
material used in the commercially available Bio-Composite anchors. Arthrex also offers the
declaration of former Kensey Nash Vice President of Biomaterial Todd DeWitt that states “to the
best of [Mr. DeWitt’s] recollection,” the 2008 testing “did not involve the material used in any of
Arthrex’s commercial products.” DeWitt Decl., ¶ 4. Even viewed in a light most favorable to
Arthrex, this does not create a genuine issue of fact for trial. See Matsushita, 475 U.S. at 587.
The deposition testimony of Kensey Nash’s Rule 30(b)(6) designee Joesph DeMeo establishes
that the reference to LR704 in the 2008 reports was an error and that the part number of the
material tested shows that the tested material was a composite of the LR706 material used in
commercially available SutureTak anchors. Pitchford Decl. in Supp. Pls.’ Reply in Supp. Summ.
J., Ex. 8 at 3-4. Mr. DeMeo’s testimony also contradicts Mr. DeWitt’s “recollection.” See, e.g.,
Schuyler v. United States, 987 F. Supp. 835, 840 (S.D. Cal.1997) (“Just as a party who opposes a
summary judgment motion may not contradict his sworn statements with his own declaration, he
may not use somebody else’s declaration for that purpose”).
In an effort to create a genuine factual issue regarding the significant differences between
the resilience of the modified Bio-Composite anchors and the SutureTaks adjudged to infringe,
Arthrex offers the opinion of its expert, Dr. Moalli. He opines that Smith & Nephew’s reliance
on the Kensey Nash modulus of elasticity test results is inappropriate because additional factors
“can” contribute to an anchor’s resilience. Moalli Decl. in Supp. Def.’s Opp’n to Pls.’ Mot.
Summ. J., ¶ 26. For instance, Dr. Moalli notes that surface texture differences in anchors with
the same modulus of elasticity “may” affect resilience and states that the characteristics of
ceramic material “suggests” that the Bio-Composite material “will behave in a more brittle
manner.” Id. at ¶ 27-28. Dr. Moalli test results show when anchors are implanted into a hole
prepared using the 14% larger drill, “the average diameter of the anchors decreased following
implantation into bone” in a matter consistent with permanent damage. Id. at ¶ 31. Despite the
decrease in the anchors’ diameter, however, he concluded the tests revealed the modified
6 - OPINION AND ORDER
anchors are not resilient because they do not return or tend to return to an original or prior
position sufficient to cause lodging. Id. at ¶ 30-31.
Even viewing this evidence in the light most favorable to Arthrex, I find that it has failed
to meet its burden of showing that a triable issue of fact exists for the jury to resolve. See
Matsushita, 475 U.S. at 587. Dr. Moalli’s conclusory statements that surface texture differences
and the characteristics of ceramic could affect resilience are insufficient to create any issue of
triable fact regarding whether they actually do affect resilience. His testing results do not
establish colorable difference in the resilience and lodging of the accused anchors because it is
clear that Dr. Moalli’s testing is based on a theory that to infringe Arthrex’s anchors must
squeeze through a smaller hole and then bounce back to an original position. Moalli Decl., ¶ 33
(noting that because surgeons insert anchors into sites that lack cortical bone “there will be
minimal or no interaction between the anchor and cortical bone to provide the S&N alleged
anchor deformation and resilience”). There is no claim limitation, however, that requires
anchors to squeeze through a smaller hole in cortical bone and then expand. Instead, “lodging”
means that “the anchor, once pressed into the hole, may not be removed.” Smith & Nephew,
Inc., Civ. No. 04-cv-029-MO, 2011 Jury Inst, Inst. No. 13 (dkt. no. 934). Moreover, even
assuming that the modified anchors do not “bounce back” to their original position, this does not
create a triable issue of fact in light of the absence of any viable dispute that the Bio-Composite
SutureTak Anchors have virtually the same modulus of elasticity as the Bio-SutureTak anchors
found to infringe in the 2004 case.
In a footnote, Arthrex asserts that the 2008 testing is only relevant to the 3.0mm BioComposite SutureTaks because the material described in the report is a PLDLA material and,
unlike the 3.0mm anchors, the 2.0 and 2.4mm anchors are manufactured with a PLLA material.
I, however, agree with Smith & Nephew that Arthrex has waived any argument that testing
conducted on anchors made of PLDLA is not relevant to establish the resiliency of anchors that
use PLLA material by not making that argument in the 2004 litigation. In the 2004 litigation,
7 - OPINION AND ORDER
testing was only done on the 3.0mm Bio-SutureTak anchors that are made of PLDLA, but all
Bio-SutureTak anchors were found to infringe, including the 2.0 and 2.4mm sizes. See, e.g.,
Pitchford Decl. in Supp. Pls.’ Reply in Supp. Summ. J., Ex. 16 at 9 (Arthrex documents
establishing that the 2.4mm SutureTak anchor found to infringe in the 2004 litigation is made of
PLLA). As Arthrex did not challenge infringement of PLLA-based anchors then, it cannot now
raise this new argument.
I find that Smith & Nephew has established that there is an absence of evidence in the
record to support a finding that there is any significant difference between the Bio-Composite
SutureTak anchors at issue here and the Bio-SutureTak anchors found to infringe in the 2004
case. See Celotex, 477 U.S. at 325 (the moving party meets its burden of “pointing out” the
absence of a genuine issue of material fact by showing an absence of evidence to support the
non-movant’s case). The Kensey Nash testing establishes that the modified features of the
SutureTak anchor—the addition of a 15% blend of a ceramic material to the anchor body—do
not substantially affect the mechanical behaviors of the anchor as the modulus of elasticity
remains virtually the same. See TiVo Inc., 646 F.3d at 882. As there are no other meaningful
differences between the anchors, I find that the Bio-Composite anchors are “not more than
colorably different” from the enjoined Bio-SutureTak anchors in terms of their ability to
resile—perform in a resilient manner for the purpose of lodging.
b. Telescoping Drill Bits Used with the Bio-Composite SutureTak Anchors
Arthrex argues that, regardless of the test results, a factual dispute regarding whether the
anchors meet the lodging and resiliency requirements (i.e. continue to infringe) when used by
surgeons precludes summary judgment. Arthrex relies on the following specific facts: The
record does not establish that surgeons insert the Bio-Composite SutureTak anchors into and
through a sufficient layer of cortical bone; and the new drill bits used with the SutureTak
products at issue in here differ from those in the 2004 case in that, because the bits are
///
8 - OPINION AND ORDER
telescoping, they prevent the anchors from touching cortical bone. Even when viewed in the
light most favorable to Arthrex, these facts do not create an issue for the jury.
First, Smith & Nephew has established that the same telescoping drill bits used with the
Bio-Composite SutureTak anchors were also used with the Bio-SutureTak and PEEK SutureTak
anchors found to infringe in the 2004 case. Pitchford Decl. in Supp. Pls.’ Renewed Mot. Summ.
J., Ex. 13 at 3. Arthrex waived any argument it had regarding lack of infringement due to use of
a drill bit that prevented the accused anchor from contacting cortical bone by not raising it in the
2004 case. Even assuming Arthrex had not waived the arguement, the failure of the BioComposite anchor to contact cortical bone would not preclude summary judgment. There is no
claim limitation that requires an anchor to squeeze through cortical bone and then expand.
Instead, the relevant limitation of “lodging” as construed in the 2004 case and approved by the
Federal Circuit requires that “the anchor, once pressed in the hole, may not be removed. . . .
‘Lodged’ means that the device is ready to secure tissue to the bone.” Smith & Nephew, Inc. v.
Arthrex, Inc., Civ. No. 04-cv-029-MO, 2011 Jury Instructions, Instruction No. 13. Arthrex has
not met its burden of setting forth “specific facts” that establish a triable issue of fact regarding
whether the modification to the body of the SutureTak anchor results in the modified anchor
failing to meet the “resilience” limitation. See Matsushita, 475 U.S. at 587. Accordingly, I find
that the Bio-Composite SutureTak anchors at issue continue to infringe on claims 1-68 of the
‘557 patent because the anchors continue to meet the “resilience” limitation. See TiVo Inc. 646
F.3d at 883 (stating once the court concludes that there are no colorable differences between a
modified and adjudged infringing product, the court must determine whether the modified
product continues to infringe).
c. Arthrex’s “Attachment” Argument
Arthrex opposes Smith & Nephew’s motion for summary judgment of infringement of
the Bio-Composite SutureTak anchors on the grounds that Smith & Nephew cannot show that
surgeons using the anchors “attach” a suture to a member and thus cannot establish direct
9 - OPINION AND ORDER
infringement. This argument hinges on Arthrex’s ability to raise a divided infringement defense,
i.e. an argument that Smith & Nephew cannot meet its burden to establish infringement because
the method steps are divided between more than one actor. At oral argument, Arthrex conceded
that in the 2004 case, the Federal Circuit affirmed that Arthrex cannot raise a divided
infringement defense. Arthrex argues, however, that it should be able to raise a divided
infringement defense in this litigation because it has shown that the Bio-Composite SutureTak
products at issue are more than colorably different as well as because Smith & Nephew has
allegedly changed its position in the pending U.S. Patent Office (“PTO”) re-examination to call
“attachment” a method step. For the reasons discussed above, I find that Arthrex has not
established a colorable difference between the Bio-Composite SutureTak products challenged
here and the SutureTak anchors found to infringe in the 2004 case. Similarly, I find that Arthrex
has not shown that Smith & Nephew changed its position in the PTO proceeding. Accordingly, I
find that Arthrex cannot raise the divided infringement defense in this case.
Even assuming arguendo I allow Arthrex to raise a divided infringement argument with
regard to “attaching” the suture to a member, the defense would fail. In the 2004 case, I
construed the meaning of various groups of words, including “attaching a suture to a member.”
During the 2007 trial, I instructed the jury:
“Attaching a suture to a member” means that the suture is
attached to the anchor itself. The molded-in eyelet of the BioSutureTak is part of “the anchor itself,” and, as a result, this
device does attach the suture to the anchor. The eyelet of the
PushLock, through a separate piece, is part–excuse me,
though a separate piece, is part of the anchor, and as a result,
this device does attach the suture to the anchor. Pitchford
Decl. in Supp. Pls.’s Renewed Mot. Summ. J., Ex. 22
(emphasis added).
The plain language of the jury instruction clearly indicates that in the 2004 case, I
construed “attaching a suture to a member” as a structural limitation and not as an active method
step to be performed by a surgeon. The Federal Circuit has recognized that it is acceptable to
use structural limitations in method claims. See, e.g., Microprocessor Enchancement Corp. v.
10 - OPINION AND ORDER
Texas Instruments, Inc., 520 F.3d 1367, 1374-75 (Fed. Cir. 2008) (noting that “method claim
preambles often recite the physical structures of a system in which the claimed method is
practiced”).
Relying on my May 2007 Opinion re Infringement in the 2004 case, Arthrex disputes that
I have consistently construed “attaching” as a structural limitation. Specifically, Arthrex notes
that I stated in reference to the V-Tak anchor that the “patent claims are written as a series of
steps” and “from the order and language of these steps, I find this claim anticipates that the
suture is attached to the anchor before it is inserted into the bone hole.” Smith & Nephew, Inc.,
04-cv-029, Opinion re Infringement (dkt. no. 241), p. 11. Although this finding requires that the
suture be attached to the anchor before it is inserted into the hole, it does not preclude this
limitation from being structural. Indeed, this finding—that the suture must be attached prior to
the anchor before insertion into the hole—is consistent with construing “attachment” as a
structural limitation instead of a method step.
I find the Bio-Composite SutureTak anchors of all sizes are not more than colorably
different from the enjoined Bio-SutureTak anchors and that the Bio-Composite SutureTak
anchors continue to infringe on claims 1-68 of the ‘557 patent. Accordingly, I grant Smith &
Nephew’s motion for summary judgment of infringement on the Bio-Composite SutureTak
anchors.
2. PushLock Anchors with Large Eyelets and Gaps; All Sizes
Smith & Nephew asserts the lack of colorable differences between the PushLock anchors
with large eyelets and gaps and the PushLock anchors with smaller eyelets and no gap
previously found to infringe entitles it to summary judgment of infringement of the newly
accused PushLock products. Arthrex’s PushLock anchors are two-piece anchors consisting of an
eyelet and a body component. Arthrex modified the PushLock anchors at issue in this case in the
following ways: (1) a gap remains between the anchoring body and the eyelet after the anchor is
inserted by a surgeon; and (2) eyelets are larger in diameter so they no longer fit within the
11 - OPINION AND ORDER
anchoring body after the anchoring body is lodged in the bone. Additionally, the 4.5 and 5.5mm
PushLock anchors have scalloped or faceted ribs, and Arthex began using a 14% larger drill bit
to implant the 3.5mm PushLock anchors. Arthrex asserts that the modifications to the PushLock
products are significant and that the newly accused anchors do not meet the “attachment” or
“resilience” limitations. As stated in the May 24, 2016, minute order, I find that Smith &
Nephew is entitled to summary judgment with respect to whether the modified PushLock
anchors meet the “attachment” limitation but that there exists a genuine issue of fact for the jury
as to whether the newly accused products meet the “resilience” limitation.
a. “Attachment” Limitation
Smith & Nephew asserts that, because there is no colorable difference between the
function of the eyelet and plastic anchor body in PushLock anchors with a gap and the anchors
without a gap adjudged to infringe, it is entitled to summary judgment regarding the “attaching”
limitation. Arthrex asserts summary judgment is not appropriate because the large eyelet cannot
fit into the anchoring body and this means that surgeons are not attaching a suture to member
that is lodged in bone. Arthrex also argues the attaching limitation cannot be met because the
gap modification ensures the eyelet and anchoring body never touch.
I agree with Smith & Nephew that the relevant question is whether the modification
results in more than a colorable difference in the ability of the eyelet and body component of the
modified PushLock anchors to function together as a suture anchor. In the 2004 case, I made
clear that “member” included multiple pieces functioning together as a single anchor. Smith &
Nephew, Inc., Civ. No. 04-cv-029-MO, Opinion re Infringement (dkt. no. 241), pp. 9-10. I found
the molded-in eyelet, “though a separate piece is part of the anchor [because] without the eyelet,
the body of the device could not function as an anchor.” Id. In other words, the functional
relationship between the eyelet and plastic body determined whether they formed a single
anchor, not the physical interaction.
Smith & Nephew has met its burden of “pointing out” an absence of a genuine issue of
12 - OPINION AND ORDER
fact for the jury regarding any colorable difference in the functional relationship between the
eyelet and the plastic body in the modified PushLock anchors. See Celotex, 477 U.S. at 325.
Arthrex’s Director of Engineering, Peter Dreyfuss, testified that the purpose of the modified
PushLock anchor’s components did not change with either the large eyelet or the gap changes
and that the proper technique for surgeons to use did not differ after the changes. Pitchford Decl.
in Supp. Pls.’s Reply in Supp. Renewed Mot. Summ. J., Ex. 24, pp. 2, 3 (stating that the purpose
of the eyelet component is “to have the sutures used in the repair, threaded through it” and that
“the barbed component of the PushLock anchor provides the fixation of the sutures in the repair
between the barbed component and the bone”). Mr. Dreyfuss testified the purpose of the eyelet
component and the plastic (i.e. barbed) component of the PushLock anchor did not change with
the large eyelet and gap modifications. Id. Smith & Nephew also cite to Arthrex’s failure to
notify its surgeon customers, alter its directions for use of its modified PushLock anchors, or
generate any regulatory memos regarding the modifications to the PushLock products, all of
which are required when modifications are made to an existing product. Id. at Ex. 25, pp. 506,
Ex. 25, pp. 2-4, Ex. 26, pp. 2-3.
Even viewing the record in the light most favorable to Arthrex, I find that it has failed to
establish a rational juror could find the gap in the newly challenged PushLock products is
relevant to the “attaching limitation.” See Matsushita, 475 U.S. at 587. Arthex’s expert, Dr.
Moalli’s assertion that the gap between the eyelet and the anchor body precludes “attachment” is
based on his misunderstanding that the “attachment” limitation was met in the 2004 case because
the “eyelet joins together with the anchor body during insertion of the anchor.” Moalli Decl. in
Supp. Def.’s Opp’n Pls.’ Renewed Mot. Summ. J., ¶ 48. His conclusory statement that “if the
eyelet is not wedged within the anchor body, it cannot assist with anchoring the suture to the
bone” is contradicted by the testimony of Arthrex’s Director of Engineering that the purpose of
the anchor components did not change with either the large eyelet or gap modifications.
Compare, Moalli Decl. in Supp. Def.’s Opp’n Pls.’ Renewed Mot. Summ. J., ¶ 49 with Pitchford
13 - OPINION AND ORDER
Decl. in Supp. Pls.’s Reply in Supp. Renewed Mot. Summ. J., Ex. 24, pp. 2, 3. Thus, I find that
there are no more than colorable differences between the function of the plastic anchor body and
the eyelet in the newly challenged PushLock anchors and the anchors previously adjudged to
infringe.
b. Resiliency
In the 2004 case, Smith & Nephew’s expert, Dr. Hayes, conducted resiliency tests using
large eyelet 3.5mm PushLock anchors, the only ones that were available. Based at least in part
on the pull-out tests he conducted, the jury found the 3.5mm PushLock anchors infringed
because they met the resilience limitations. Smith & Nephew argues these tests mandate a
finding that the modified 3.5mm Bio and PEEK PushLock anchors meet the resilience limitation.
Arthrex argues the PushLock resiliency test results presented at the 2011 trial are not applicable
in this case because Arthrex changed the dimensions of the drill bit used to form the hole for the
3.5mm PushLock anchors to be 14% larger and because it changed the rib shape of the 4.5 and
5.5mm anchors. I agree that Smith & Nephew cannot rely on the results of resiliency tests
conducted in the 2004 case using a smaller drill and anchors with different shaped ribs to
establish that no triable issue of fact exists regarding the resiliency of the modified PushLock
anchors. Celotex, 477 U.S. at 325.
Smith & Nephew asserts that pull-out testing conducted by Dr. Hayes on the modified
3.5mm PushLock anchors, in all materials (PEEK, bioabsorbable, and biocomposite) as well as
the 4.5 and 5.5mm anchors with modified ribs establishes that these anchors meet the resilience
and lodging limitations. Hayes Decl. in Supp. Pls.’ Renewed Mot. Summ. J., ¶¶ 82-86, 89-93.
Arthrex challenges the results of Smith & Nephew’s tests on the basis that pull-out tests are not
“clinically relevant” and that Dr. Hayes failed to account for, among other things, misalignment
between the nose of the anchoring body and the separate eyelet. Moalli Decl. in Supp. Def.’s
Opp’n Pls.’ Renewed Mot. Summ. J., ¶¶ 65-70. Arthrex also offers evidence that pull-out tests
conducted by its expert, Dr. Moalli, indicate that the modified 3.5mm PushLock anchors
14 - OPINION AND ORDER
implanted with the larger drill bit do not exhibit any resilient properties. Id. at ¶¶ 71-72. Smith
& Nephew contends that Dr. Hayes was aware of and corrected for misalignment. Hayes Decl.
in Supp. Pls.’ Reply in Supp. Renewed Mot. Summ. J., ¶ 35. Arthrex challenges Dr. Hayes’s
explanation of how he accounted for misalignment on the basis that Dr. Hayes does not
adequately explain his methodology, but merely asserts that he did. Moalli Decl. in Supp. Def.’s
Sur-Reply Opp’n Pls.’ Renewed Mot. Summ. J., ¶ 20.
I find that Smith & Nephew has failed to meet its burden at summary judgment to
establish the absence of a genuine issue of material fact regarding whether the modified
PushLock anchors meet the “resilience” limitation. Celotex, 477 U.S. at 325. While I do not
credit Arthrex’s assertion that push-out tests are scientifically invalid, I find that whether Dr.
Hayes’s push-out tests on the modified PushLock anchors adequately accounted for the potential
of misalignment is a genuine issue of fact. Both parties’ experts agree it is possible during a
push-out test for the eyelet to tip over, wedge at an angle against the bone hole, and skew the
push-out force results. According to Smith & Nephew, Dr. Hayes accounted for possible
misalignment by using a test machine that moves along only one axis and modifying the pushout rod to ensure the anchor did not tip. Pls.’ Reply Br. in Supp. Renewed Mot. Summ. J., 29;
Decl. Hayes in Supp. Pls.’ Reply Br. in Supp. Renewed Mot. Summ. J., ¶ 35. Arthrex contends
that Dr. Hayes’s methodology is flawed because the movement of the test sample, not the
machine, creates misalignment concerns. Def.’s Sur-Reply to Pls.’ Mot. Summ. J., 8; Moalli
Decl. in Supp. Def.’s Sur-Reply to Pls.’ Mot. Summ. J., ¶ 20. Arthrex also contends the
modified push-out rod Dr. Hayes stated he created would not work with the anchors he was
testing because of its size. Moalli Decl. in Supp. Def.’s Sur-Reply to Pls.’ Mot. Summ. J., ¶ 19.
Smith & Nephew’s conclusory statement that Dr Hayes accounted for possible
misalignment in his push-out tests is not sufficient to establish an absence of a genuine issue of
material fact regarding his methodology. A reasonable fact-finder could credit Arthrex’s
criticisms of Dr. Hayes’s efforts to account for misalignment and conclude that his testing does
15 - OPINION AND ORDER
not establish the resilience of the modified PushLock anchors. Similarly, Smith & Nephew’s
contention that no rational fact-finder could accept Dr. Moalli’s competing tests regarding the
resilience of the modified 3.5mm PushLock anchors does not satisfy its burden on summary
judgment. Smith & Nephew is not entitled to summary judgment regarding the resiliency of the
modified PushLock anchors at issue in this case.
B. Arthrex’s Motion for Summary Judgement of Non-Infringement for BioComposite SutureTak Products
Arthrex asserts it is entitled to partial summary judgment of non-infringement with
respect to sales of its Bio-Composite SutureTak anchors because Smith & Nephew cannot meet
its burden of establishing direct infringement. Specifically, Arthrex asserts any infringement is
divided between Arthrex and its customer surgeons because it sells Bio-Composite SutureTak
anchors with the suture pre-attached. Consistent with my resolution of Smith & Nephew’s
motion on the same anchors, I find Arthrex cannot raise a divided infringement defense in this
case, and even if it could, the defense would fail because “attachment” is a structural limitation,
not a method step. Accordingly, Arthrex’s motion for partial summary judgment of infringement
of the Bio-Composite SutureTak anchors is denied.
C. Arthrex’s Motion for Summary Judgment of Non-Infringement for PushLock
Products
Arthrex seeks summary judgment of non-infringement with respect to its modified
PushLock products. As with my resolution of Smith & Nephew’s motion on infringement of the
PushLock anchors, I find there are issues of disputed fact for a factfinder to resolve with respect
to the resiliency of the newly challenged PushLock products. Thus, Arthrex’s motion for
summary judgment of non-infringement for PushLock products is denied.
III.
Reasonable Royalty Damages
Smith & Nephew asserts it is entitled to summary judgment and the appropriate rate for
reasonable royalty damages is 11%, the same rate that was awarded by the jury and by the Court
for supplemental damages. Smith & Nephew argues Arthrex’s infringement has been continuous
16 - OPINION AND ORDER
and uninterrupted since 2001, the initial date of infringement of the 3mm Bio-SutureTak anchor.
It also contends there can be no genuine dispute that the issues in the 2004 litigation and this
litigation are the same because the differences between the accused anchors are insubstantial.
Thus, Smith & Nephew asserts the same royalty rate applied in the 2004 case should apply to
royalty damages awarded in this litigation.
Arthrex first argues a 2006 Federal Circuit decision, Applied Medical Res. Corp. v. U.S.
Surgical Corp., 435 F.3d 1356 (Fed. Cir. 2006), bars the application of the royalty rate from the
2004 case to this litigation. Arthrex next disputes the jury even decided on a reasonable royalty
rate in the 2004 case because it awarded a lump sum royalty, not a rate. Arthrex also asserts
there are a multitude of disputed facts relevant to the royalty rate analysis—differences in the
products, damage analysis, and hypothetical negotiation dates—that preclude summary
judgment.
I do not read Applied Medical as barring the application of the royalty rate from the 2004
case. As Smith & Nephew points out, in that case, the Federal Circuit concluded that, although
the sales of the infringing products “may appear to be continuous in time,” they were not
necessarily “continuous in law.” Id., 435 F.3d at 1362. The sales of the second infringing
product were a “separate and distinct infringement” from the sales of the first product. Id at
1361. The first infringing product was off the market and enjoined before the second infringing
product was introduced. Id. at 1358. The record establishes that the sales of the products at
issue here and in the 2004 case overlapped; indeed, the products at issue in this case were on the
market during the 2004 litigation and Smith & Nephew tried to include them in the 2011 trial in
the 2004 litigation. Another significant distinction is that in this litigation there is an allegation
that the products at issue violated the injunction entered in the 2004 case and in Applied
Medical there was no allegation the defendant violated the injunction with the introduction of the
second infringing product. Id. at 1362. Accordingly, I do not read Applied Medical as requiring
that I deny Smith & Nephew’s motion. Id. (noting “[w]e recognize that there may be instances,
17 - OPINION AND ORDER
which we do not address here, in which two products, even if not identical, may present the same
damages analysis”).
Even viewed in a light most favorable to Arthrex, its arguments do not raise a genuine
factual dispute that precludes summary judgment that the royalty rate applied in the 2004 case is
appropriate to apply to royalty damages awarded here. While Arthrex is correct that the jury
awarded a lump sum for royalty damages, I am permitted to determine the damages methodology
adopted by the jury in awarding royalty damages. SynQor, Inc. v. Artesyn Technologies, Inc.,
709 F.3d 1365, 1384-85 (Fed. Cir. 2013) (approving the district court’s use of the methodology
that was adopted by jury for awarding supplemental damages). Moreover, Arthrex agreed in the
2004 case that the 11% rate “approximates the jury verdict.” Pls.’ Reply Br. in Supp. Mot.
Summ. J. Reasonable Royalty Damages, p. 4-5 (citing Def.’s Resp. in Opp’n Mot. for
Supplemental Damages and Additional Pre-Judgement Interest, p. 9, n. 4). As discussed above,
Arthrex has not shown any genuine issue of fact regarding whether there are substantial
differences between the products included in the 2004 case and the anchors at issue here.
Finally, I do not find the parties’ submission of new expert reports creates a genuine issue of
triable fact regarding whether the royalty rate awarded in the 2004 case is appropriate here. I
grant Smith & Nephew’s motion to apply the 11% rate that approximates the jury’s royalty rate
award in the 2004 case to any royalty damages awarded in this litigation.
IV.
Conclusion
For the foregoing reasons, Smith & Nephew's motion for summary judgment of
infringement [224] is GRANTED in part and DENIED in part. Arthrex's motions for summary
judgment as of non-infringement [197] [199] are DENIED. Finally, Smith & Nephew's motion
for summary judgment as to reasonable royalty damages [267] is GRANTED.
///
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18 - OPINION AND ORDER
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Within three weeks of the date this order is filed, the parties are directed to submit jointly
agreed upon dates for a trial in the fall of 2016 on the issue of the resilience of the modified
PushLock anchors.
IT IS SO ORDERED.
DATED this 15
day of June, 2016.
/s/Michael W. Mosman
MICHAEL W. MOSMAN
Chief United States District Court
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